The router then went into R2 register processing, meaning it sends particular tones and expects certain responses from the exchange.

When the debugs print out TX and RX '#', this actually is a IOS description for tone off, or no tone generated or received.

This relates to the way E1R2 works in that each side is Compelled to send a tone until the other side responds with an ACK tone, then they stop sending this particular tone.

To send the Call out, the router sends the 1st DNIS digit until it recieves the ack tone. Then it stops sending the digit, the exchange stops sending the ack tone and it then repeats the process for all the digits.

This call looks like it worked fine - the called number was 3050 and it appeared to be accepted by the telco and was answered.

The problem with E1 R2 is that there are many different country specific variants and a debug for one country does not necessarily apply to another. In the case above, it appears the E1 R2 was running the Telmex variant.